Some publishers relieved, others irate over Apple subscription plan

Publishers have had a day to digest Apple's new in-app subscription rules, and …

It has now been one full day since Apple announced its new subscription "offerings" to third-party developers, along with a new set of rules, and the first wave of reactions is best described as "mixed." While some content creators have already tossed out the "L" word (as in "legal"), others are keeping quiet as Apple's June 30 deadline looms. Some are even relieved by the new guidelines.

Among the details that riled up publishers on Tuesday, Apple said that it was requiring all publishers that regularly sell online subscriptions for access on iOS devices (including newspapers, magazines, music, and video services) to also offer those subscriptions for sale via Apple's own system. When they sell those subs through Apple's system, they must offer the same or better price as elsewhere, Apple will take a 30 percent cut of those sales, and their apps can no longer link to an outside store (where Apple would get no cut).

Music subscription service Rhapsody, which offers a free app on the iOS App Store, made its discontent known almost immediately following Apple's announcement.

"[A]n Apple-imposed arrangement that requires us to pay 30 percent of our revenue to Apple, in addition to content fees that we pay to the music labels, publishers and artists, is economically untenable. The bottom line is we would not be able to offer our service through the iTunes store if subjected to Apple's 30 percent monthly fee vs. a typical 2.5 percent credit card fee," Rhapsody president Jon Irwin told Billboard. "We will be collaborating with our market peers in determining an appropriate legal and business response to this latest development."

The companies behind other popular apps that leverage subscriptions, such as Netflix, Hulu, and Amazon, remained silent. Apple's move will certainly change up their business models, and they're not likely to be happy about forking over 30 percent of their subscription revenues to Apple.

Still, others claim to be happy with the situation. Design agency Tigerspike, which is responsible for creating apps for more than 20 popular publications, told paidContent that those publishers were ready for much worse. "Publishers were bracing themselves for the fact that Apple might turn off any subscriptions from outside of Apple," Tigerspike's Nic Newman said. "But, if you go to the detail of what they’re saying, you can still have your own subscription mechanism outside the app, as long as you also have something inside the app. So they’re giving flexibility."

In fact, from the user side, people seem to be reacting even more positively. Former Apple exec Jean-Louis Gassée got Twitter talking yesterday when he tweeted that he resented the old model and that the new rules are "consumer-centric." Industry analyst Michael Gartenberg agreed—he told Ars that users simply don't care about who gets what, and that they only want simplicity and a good user experience.

"I don't think we'll see many users who care about this one way or the other," Gartenberg said. He added that many in the publishing industry aren't likely to balk at the deal either. "Many magazines and newspapers are also likely not going to be upset; they're used to paying a lot more than 30 percent for customer acquisitions."

The system may not be as bad as some publishers expected, but that hasn't stopped the industry from speculating about possible legal implications of Apple's new model. Several law professors told the Wall Street Journal that Apple could be setting itself up for an antitrust suit if Apple is found to be asserting "anticompetitive pressures on price." Publishers making such an accusation would have to prove that Apple has a truly dominant position in the market. "Millions will be spent litigating how broad the market is," antitrust professor Herbert Hovenkamp told the Journal.

Gartenberg warned, however, that it's too early to determine how things will play out for businesses that do have a problem with the new policies. "It's tricky. A lot of these businesses [such as Rhapsody, Kindle, Nook, Netflix, and Hulu] are already operating at fairly tight margins. A 30 percent cut hurts. On the other hand, the Apple platform helps drive new users, so I get where Apple is coming from. This can play out a lot of different ways over time," he said. "It's too early to asses the impact and how these companies might or might not respond. It's also worth noting Apple has changed policies in the past—for example, the position on third-party development tools for iOS—so we'll have to see how this plays out between now and June 30."